An independent analysis that predicts Donald Trump's economic policies would plunge the United States into a deep recession is a "hit piece" that "lacks credibility," from a lead author who "appears to be pursuing a political agenda on behalf of the Democratic Party," an economic adviser to the Trump campaign declares in a brief report set to be unveiled on Monday.
The report offers no new projections or modeling of the effects of Trump's proposals. It simply attacks the previous analysis, published earlier this month by a team of researchers at Moody's Analytics. It in particular targets the lead author of that analysis, Mark Zandi, who donated $2,700 last year to the campaign of Trump's presumptive Democratic opponent, Hillary Clinton.
The Moody's analysis concludes that Trump's plans for trade, taxes and immigration, if fully implemented, would effectively kill nearly 10 million American jobs and cause an unusually long recession.
In the Trump-requested report, a University of California-Irvine economist and business school professor, Peter Navarro, contends that deporting 11 million immigrants who have entered the United States illegally would not hurt the economy. That's because those immigrants would cease to draw public assistance and their jobs would be taken by native-born Americans, particularly African-Americans.
Navarro also contends that Trump's threat of high tariffs on Chinese goods would force Chinese leaders to change their trading practices and eliminate their trade surplus with America, boosting economic growth in the United States.
And he says Moody's was wrong to rely on other independent analyses that have concluded that Trump's tax cutting plan would increase the federal budget deficit by trillions of dollars over a decade. Those analyses are wrong, Navarro says, because Trump has said his tax plan will not increase the deficit.
“I don’t have the elaborate model of Moody’s" or the Tax Policy Center, whose analysis of Trump's tax proposal Moody's cites in its report, Navarro said in an interview. "The basic foundation of my analysis is, 'garbage in, garbage out.'"
Navarro has praised Trump this year on CNBC and in the Huffington Post, among other outlets. He said in the interview that he has been advising Trump formally for "a couple of months," and that he wrote the new report without any guidance or interference from the campaign.
Zandi declined to comment.
In its report, Moody's acknowledges that it is being forced to make assumptions about how some of Trump's policies would be structured or implemented, because Trump has left many of the details blank in his written proposals. "Quantifying Mr. Trump’s economic policies is complicated," the Moody's report says near the beginning, "by their lack of specificity."
Navarro contends Moody's gets the big assumptions wrong. Trump's massive tax-cut plan, he says, will not cost the federal government a dollar in tax revenue, and certainly not the $9.5 trillion over 10 years that the Tax Policy Center projects based on its modeling of the details Trump has released. (The Tax Foundation, which uses a dynamic scoring model that assumes large boosts to economic growth from tax cuts, actually predicts higher revenue losses from the Trump plan, at just over $10 trillion for a decade.)
But Trump, Navarro says, won't pass a tax plan that loses money - so those projections are not valid. “For the Trump tax plan, revenue neutrality is an important principle," he said. "And that’s where you start. That’s the most important principle.”
The same is true for trade. Trump has threatened to impose 45 percent tariffs on imports from China, Mexico and other trading partners. Moody's projects such tariffs would lead to retaliation and drive up the price of consumer goods, harming the economy, while not driving manufacturing jobs back to the United States.
China, as it happens, is a major area of interest for Navarro. He has been warning about America's trade deficit to China for years, and has produced a documentary film, "Death by China," narrated by Martin Sheen. He said in the interview that Zandi, like many economists, does not understand how damaging that trade deficit has been. Trump, he said, does.
If Trump takes office and threatens tariffs, Navarro writes in the paper, the likely scenario is that "Chinese leaders realize they no longer have a weak leader in the White House, and China ceases its unfair trade practices. In this scenario, American’s massive trade deficit with China comes peacefully and prosperously back into balance over time. Both the U.S. and Chinese economies benefit while workers’ rights improve along with the global environment."
Navarro's biggest issue is with Zandi, who he says has an "insurmountable credibility issue" due to his Clinton donation and work he published in previous years praising President Obama's economic stimulus plans. Nearly half Navarro's report is a direct attack on Zandi.
"I was asked by the Trump campaign to independently review the paper’s methodology and findings with the broader goal of determining how such a flawed report could emanate from a well-established firm such as Moody’s," he writes. "The short answer to that question is that the lead author is a Democrat and a major contributor to Hillary Clinton who appears to be pursuing a political agenda on behalf of the Democratic Party."